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The credit union auto loan portfolio grew 3.2% in 2006 to reach $180 billion. The growth rate, down from 9.2% in 2005, is following the path of slowing auto sales, which decreased by 3.1% nationwide last year.
Diversifying efforts in today’s intensely competitive auto market can strengthen your credit union’s auto loan portfolio. Earlier this month, credit unions from across the country participated in a webinar featuring Alliance FCU ($134 million, Lubbock, TX) and IAA ($114 million, Bloomington, IL) to learn more about auto loan recapturing, an effective growth strategy in a slowing auto market. Here is a collection of some of their insights to consider as you move ahead with your own auto loan program.
- Start Big, Then Narrow
When launching a recapture program market to a large pool of potential re-financing applicants, typically you are targeting people who purchased within the last 18 months. As your program takes shape, your target list will become smaller, yet more refined.
- Call for Backup
Consider a 3rd party program that suits your goals. Many services can provide credit unions with a program that is a suitable fit, so ask questions until you find the right match.
- How do they charge their client, the credit union? Can they customize a pricing plan to match your needs?
- Is location important to you? Do they have offices near your credit union?
- Ask for references.
Third parties offer key information on your audience that allow you to target your mailings based on numerous searches, including a person’s current auto loan rate and credit quality. Such lists offer opportunities to generate quality applicants, and even multiple refinances if the individual has more than one loan.
- Calling All Staff
Is everyone in your credit union aware of the program? Cover all bases by alerting every relevant department of your auto recapture efforts. Front-line staff regularly deal with customers and can change their message and approach daily based on your auto recapture goals.
- Tell Them What They’re Missing
Be creative with your marketing. Propose a co-branded campaign with your SEGs to offer their employees an exclusive deal. Affiliating with a great deal and conveying added value to employees can be very appealing to SEGs.
- ‘Tis the Season for Deadlines
For promotions, use holidays and seasons as a deadline to convey a sense of urgency. Yet, be open to honor the holiday rates after the cut-off date.
- Top of Mind
As more car buyers go online to do initial research, they are not only looking for the right car, they’re looking for the right deal. Advertising on your own site is a smart way to publicize a great offer.
- Thinking Outside the Rate
To build relationships, consider alternatives that offer more than just beating a competitor’s rate. Package a good rate with an incentive to refinance. Consider a gift card based on the loan amount to reward your new accounts.
- Timing is Everything
Saving your new members cash on a re-financed loan can put you in a great position to cross-sell. But, do so at the initial point of contact for maximum results.
- Back to School
You can’t get every loan, but you can make an effort to educate every individual about the car buying process. Providing potential auto loan applicants with educational material, such as a car buying guide on your website, a monthly newsletter, and even car buying seminars, can go a long way in conveying value in your credit union.
- Pace Yourself
You don’t have to run your program on a continuous basis to be successful. The market fluctuates throughout the year, and your recapturing efforts can correspond accordingly.
There are many paths to take to grow your auto loan program. Selecting the right moves to expand your program will take ambitious goals, informed decision making, and a motivated team to drive the program’s success.
To learn more about auto recapturing strategies check out the, “Re-strategizing in a Slowing Market – Successful Loan Recapture Programs” webinar, brought to you by Callahan & Associates, Inc.